The Australian Taxation Office has released information regarding their annual updates to small business benchmarking, with data from recent financial years.
Small business benchmarks are key financial ratios developed to help business owners compare their performance against similar businesses in their industry and to help the ATO identify those that may not be reporting all of their income.
The following types of benchmarks are made for the small business sector:
- Performance benchmarks, providing key financial ratios for different industries
- Input benchmarks, showing an expected range of income for tradespeople based on the labour and materials they use.
A number of updates have been made to small business benchmarks and these include the following:
- The addition of new industries to small business benchmarking – including landscape construction, motor vehicle retail, panel beating and smash repairers, lawn mowing and garden services, tattooing services and pharmacy.
- The addition of total expenses to turnover benchmark ratio – allowing businesses that don’t consistently report expenses for either cost of sales or labour, to measure their performance against others in their industry.
- Merging previously divided industries that no longer require separate benchmarks.
- Revising annual turnover ranges (ie. low, medium and high turnovers) for different industries so that businesses with similar characteristics in the recent data are grouped together.
We recommend that businesses review their business KPI’s annually. Oculus are small business specialists. We can calculate, interpret and apply your business KPI’s and compare your performance against similar businesses and help you avoid the ATO’s audit.